Theresa May’s speech: is she dreaming?

Theresa May said she had a clear message for housebuilders. “We, the government, will make sure the land is available. We’ll make sure our young people have the skills you need. In return, you must do your duty to Britain and build the homes our country needs.”

How the government would keep its side of the bargain was a little less opaque. In an attempt to woo young voters, May committed £10bn of new funding to the Help to Buy scheme, however its future beyond 2021 remains in doubt.

£2 BILLION NOT ENOUGH

May also unveiled an additional £2 billion investment in affordable housing. “We will encourage councils as well as housing associations to bid for this money and provide certainty over future rent levels,” she said. “And in those parts of the country where the need is greatest, allow homes to be built for social rent, well below market level.”

The government has since clarified that the numbers of homes will be determined on type and location of housing. In theory, this £2 billion investment can supply around 25,000 more homes with a typical £80,000 subsidy.

Ministers also confirmed plans to set a long term rent deal for councils and housing associations in England from 2020.

However, this patch on Labour’s pledge to build 100,000 council houses has received a lukewarm reception. “The £2bn offered is a step in the right direction but will have a limited impact, delivering around 5,000 new homes a year,” said Bjorn Howard, group CEO of Aster Group, said. “We will need much more investment and creativity to successfully tackle one of the biggest issues facing society. We have committed £1.5bn of our own capital into building new homes over the next seven years and that puts this new funding, which is intended for the whole sector, into perspective.”

RIBA President Ben Derbyshire added, “While it’s good news that the Prime Minister has made fixing the housing crisis a central priority for the government, the extra £2 billion promised just won’t meet the scale of investment needed to address decades of under-supply.

“The government spends billions of pounds a year subsidising private landlords because of a shortage of social housing. They need to dial up the approach and investment, moving beyond describing the problems and big rhetoric to delivering solutions and the investment that will make the difference. Warm words won’t put roofs over people’s heads; we need a concerted programme of public investment in new social housing across the country and that means spending a lot more than was announced.”

COUNCILS NEED MORE FIREPOWER

While it is generally agreed that councils need to play bigger role in housebuilding, Theresa May’s pledge handed local authorities another tool where a crane was needed.

While more funding will certainly help, the government needs to do more to empower councils to tackle the issue of affordability. For instance, removing the borrowing cap on local planning authorities would go a long way towards stimulating councils to build more homes.

Rico Wojtulewicz, policy advisor for the HBA, said, “More money for new council homes is good, but the government is only scratching the surface of the problem. Removing the borrowing cap on local authorities would certainly enable them to invest more in their local communities, but only radical planning reform will allow us to tackle the current housing crisis.

“The current planning process remains a considerable barrier to many SME housebuilders and developers and we can only assume councils will fall foul of the same barriers. Overhauling the planning system is vital to building more homes and ultimately solving the housing crisis.”

Lord Porter, Chairman of the Local Government Association, added, “Every housing market is different and the only way councils will be able to significantly deliver the new homes we need is if they are given genuine powers to invest in housing that meets the needs of communities in every town and city across the country.

“This means the ability to borrow to invest in new council housing, to keep 100 per cent of Right to Buy receipts to replace sold homes, certainty over future rents, powers to make sure developers build approved homes in a timely fashion, and adequately funded planning departments so that they can cover the cost of processing applications.”

NOT ENOUGH SOLUTIONS FOR DEVELOPERS

At any rate, May’s rehashed policies failed to clear the way for developers to deliver the number of homes she promised.

“While it’s good news that Theresa May has pledged further investment into fixing the housing crisis, there are a number of other factors that can prevent homes from being built as quickly as we might like,” said Steve Mansour, CEO of CRL.

“The industry must look at the requirements of the modern homeowner, and potentially consider alternative methods to create the necessary amount of homes, for example, prefabricated and multigenerational homes,” Mansour added. “It is also important to take into account that basic, affordable family homes do not offer the highest return on investment, and ultimately, these are the types of houses that need to be built to address the shortfall.

“In addition, the government must support the industry and reassess current processes by cutting red tape and updating overcomplicated planning regulations. Whilst this has partly been implemented by The Neighbourhood Planning Act 2017, more can be done to make the overall process simpler for developers to gain the necessary permissions. This will enable a faster planning application process and help to ease the current complex and time-consuming procedures.”

May also promised developers she would equip young people with the skills they need to become budding housebuilders while ignoring the fact she may be sending a large chunk of the current workforce back to the EU. “Following Brexit, the serious shortage of skilled labour the construction industry is already dealing with will be exacerbated if it becomes much more difficult for EU tradespeople, who have come to play a crucial part in plugging the industry’s chronic skills gap, to move to and work in the UK,” said Brian Berry, CEO of the FMB.

“Although the industry must seek to overcome this crisis by recruiting and training many more young people than we currently do, the government must also be mindful and realistic about the continuing need there will be for skilled EU workers as it puts in place its post-Brexit immigration policy. Otherwise it will risk jeopardising the delivery of the bold new house building ambitions the Prime Minister outlined,” he added.

DREAM BIGGER

The few policies outlined in May’s speech could be too easily interpreted as watered down versions of those that won Labour an unprecedented number of seats in her ill-fated snap election.

“Theresa May admits seven years of Tory failure on housing was a big part of why her Party did so badly in the election,” said John Healey MP, Labour’s Shadow Secretary of State for Housing. “Yet four months on, Sajid Javid’s speech shows there’s no new Tory thinking on housing. His pledges are feeble and fail to offer help or hope to millions who can’t get the home they need or aspire to.

“Young people held back by a broken housing market don’t need Theresa May’s empty empathy but a consumer rights revolution for renters, new discount homes for first time buyers and the big-scale building programme of genuinely affordable homes to rent and buy that Labour set out in our Election manifesto.”

While spluttering through her speech, May claimed she would reignite the ‘British Dream’ of homeownership; however, the reaction is clear: she needs to dream bigger.

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